Companies providing electronic money services, such as online or mobile payments accounts, have more than doubled since 2013

The number of companies providing e-money services has more than doubled since 2013.

Research by financial services regulatory consultancy Bovill found that the number of providers of electronic money – where money is stored electronically on online payment accounts or pre-paid cards, dubbed e-money – has risen from 38 in 2013 to 79 by the end of 2015.

This number has been on the rise over the past few years as consumer confidence in alternative payments methods has increased.

“This is a fast-moving and innovative sector. We expect the number of authorised firms to continue to grow at a rapid pace,” said Gillian Roche-Saunders, head of venture finance at Bovill.

“UK consumers and businesses are increasingly comfortable with the idea of a cashless economy, in which they might not be able to physically see or access money. More are embracing pre-paid cards, contactless and mobile payment systems for ease of use, efficiency and enhanced security.”

E-money can also refer to money stored magnetically or through a mobile payments system. Roche-Saunders predicts this increase in pre-paid cards in particular is a bid from consumers to avoid debt, which they could run into as a result of using traditional credit cards.

“Pre-paid cards are an increasingly attractive option for consumers who may not feel secure using a traditional credit or debit card online, for instance. They also work well where a consumer may not be able to obtain a conventional credit card or might not want to risk running up substantial debts on one,” she said.

Online businesses drive use of e-money

However, these e-money providers must be registered with the Financial Conduct Authority (FCA) under the Electronic Money Regulations 2011, ensuring consumers are safe from fraud or theft.

“The regulatory background is complex and e-money providers need to ensure that systems, processes and controls are tight to ensure a high level of consumer protection. The FCA is not afraid to place these businesses under a microscope,” said Roche-Saunders.

Read more about payments

Back-end processing and data management will suffer if firms fail to keep up with fast-growing alternative payments.

More than one million journeys on the London tube network were paid for using contactless Visa cards in a single day in the run-up to Christmas 2015.

Start the conversation

0 comments

Register

I agree to TechTarget’s Terms of Use, Privacy Policy, and the transfer of my information to the United States for processing to provide me with relevant information as described in our Privacy Policy.

Please check the box if you want to proceed.

I agree to my information being processed by TechTarget and its Partners to contact me via phone, email, or other means regarding information relevant to my professional interests. I may unsubscribe at any time.